I'm sorry, it's not a mystery why we sleep. It's widely known that sleep is needed for repair and maintenance. The lack of movement and (stimuli caused or consciously created) brain activity means almost all the energy and nutrients can be used to fix all the injuries and problems we have as well as sort out our brain's memories and synapse placements.

what we don't know is why we DREAM. But our brains are still very active during sleep, so it's probably just how our conscious interprets all that **** happening in the brain (especially since dreams have so much reliance on important/current memories). That's my theory at least.

Correlation does not equal causation.
Almost every plant and mammals creatures DMT. Even during our waking hours. It's emitted the most during extreme fright. However, even then it's an extremely small dosage. Because we don't have dream-state when we get scared, it can easily be assumed DMT isn't the cause of dream-states during sleep (naturally). Also, as DMT is used in both plants and mammals, it wouldn't make sense for it's purpose to be dreaming. Such a wide variety of species where the majority do not dream leads to other probable causes (unidentified).

However, correct cataloging of memories via an intelligent form of a linked list structure (synapse - synapse makes this the most likely) is the most active process in the brain. As well, the rapid deconnecting and reconnecting of our neural pathways could easily simulate a psychedelia drug of great magnitude. Therefore, the interpretation of the catalog by the consciousness with the rapidly changing chaos in the sleeping brain influencing it would be a much more likely cause. Also, because dreams aren't naturally (you can train the habit) stored into memory, it supports the assumption that they were never meant to really happen to begin with, so no use wasting the space or thoughts.

Next time you go to bed, keep a notebook beside. Write down everything you can about the dream the moment you wake up (don't do anything first). Then look at everything and (unless you go lucid) the majority of the story can easily be identified as a recent or significant memory.